This is the fourth in a series of monthly blogs about resolutions commercial mortgage broker should make and keep to increase business in 2016.
Whether you’re just getting started in the commercial mortgage industry or you’re an experienced professional, you’re going to hear some common objections from borrowers when you try to sell them on small-balance commercial mortgages. While these loans are the best solution for many borrowers, there will be some who want to know why the appraisal is so expensive, why the rate is so high or why there is a prepayment penalty. You just need to know how to address these complaints in order to sell the loan. Here’s what to do:
Under-promise and over-deliver.
One of the biggest mistakes a broker can make is promising a non-bankable commercial borrower residential rates for their property. The rates and terms of small-balance commercial mortgages depend entirely on your borrower’s financial situation and their property. Don’t give them specifics until you have offers from lenders; tell them you’ll secure them the best possible commercial mortgage for which they qualify.
Accentuate the positive.
Generally, the biggest complaint mortgage brokers will receive from their non-bankable commercial borrowers is that the rate is too high. Because these borrowers are unlikely to qualify for low rates, you need to sell the positives of the loan so that they can get past this. Whether that means focusing on a fixed and fully amortized rate or the speed with which the loan will close, make sure your borrower sees the upside. Read more in our previous post about understanding your borrowers and why it means more closed commercial mortgages.
Focus on your borrower’s objective.
If your borrower still has reservations after you’ve explained the benefits of a nonconforming commercial mortgage, get them focused on their goals. If a mortgage from a small-balance commercial lender is the only way your borrower can refinance their property, pay off their credit card debt or make property improvements, make sure they know. There are many borrowers willing to compromise once they understand what they need to in order to achieve their goals. Read more in our previous post on knowing when a commercial mortgage lender is right for your borrower.
Commercial borrowers don’t like to feel as though they have no control in the lending process. It will be easier to sell a small-balance commercial mortgage if you provide your borrower with some options. For example, provide one scenario where the rate is fixed and one where the rate is adjustable, and allow your borrower to decide what they’d prefer.
Brokers will run into challenges from time to time when selling small-balance commercial mortgages, but it’s possible to get your borrower’s to see the light. Be honest with your clients about the deal they’re likely to get, keep the focused on the positives and their goals, and provide them with options. If you’re able to do this, you’ll be more likely to sell your borrowers on the small-balance commercial mortgages they need, allowing you to close more loans.